Author: jk, Odaily Planet Daily

On Wednesday, January 31, local time in the United States, the bankrupt cryptocurrency exchange FTX expressed to the court its expectation to fully repay its customers. This statement was made public during a court hearing, and the preliminary approval of this date was granted by the US bankruptcy judge John Dorsey, despite considerable dissent from a significant portion of the creditors.

According to the court proceedings, FTX has abandoned its plan to restart its platform and instead focused on fully repaying its former clients. Due to a lack of buyers, FTX abandoned its plan to restart its platform. Advisors conducted a thorough search in the market to find investors willing to restart FTX, but no one was willing to provide the cash needed to restart the exchange.

FTX lawyer Andrew Dietderich stated that the repayment process will require claimants to submit evidence to verify that they indeed held assets and suffered losses on FTX. This process will be reviewed by restructuring advisors.

Is the platform token FTT still useful?

FTX's native token FTT briefly rose after the company's announcement of this plan, but then sharply declined. A few days ago, the price of FTT had been fluctuating around $2.65, but now it has dropped to around $1.91, reaching a low of $1.65, with a 7-day decline of 27.04%.

FTT trend, Source: Coinmarketcap

This market reaction was actually expected. According to the previous expectation of a restart, the appreciation of FTT was based on the possibility of FTX using FTT as the native token after the restart, or exchanging FTT at a certain proportion to issue new native tokens. However, this expectation was shattered with FTX's announcement that it will not restart. After giving up the restart, FTT has actually lost its new utility, and as FTX continues to liquidate assets to compensate customers, the value of FTT will inevitably further decline due to selling.

In the worst case scenario, FTT may ultimately become a de facto memecoin like Luna Classic after the collapse of Terra, fluctuating with each related news, but with a very high probability of never returning to its previous high points.

Full compensation: It's good news, but at what point in time will the assets be compensated?

FTX previously reported over 36,000 claims totaling approximately $16 billion. Last year, it stated that it could only compensate about 90% of customers. Now, intending to fully compensate customers is naturally better news, but it also brings a subsequent issue; FTX is likely unable to compensate customers with the original types of tokens, so if compensated based on the value in US dollars, what point in time will be used as the basis for the US dollar value?

If the value of Bitcoin was around $20,000 before the collapse of FTX, it dropped to around $16,000 at the time of FTX's bankruptcy announcement, and is now around $43,000, the difference is huge. "Many claims are based on the significant drop in the value of the currency during that turbulent period," said Kris Hansen, a lawyer for the FTX creditors' committee, at Wednesday's hearing.

According to Bloomberg, US bankruptcy judge John Dorsey ruled that the scale of each claim will be based on the amount owed to customers or creditors by FTX on the day it filed for bankruptcy. Dorsey also approved rules for estimating the amounts owed to each creditor and customer. Some customers complained that fixing their claims at the end of 2022 prices would cause them to miss out on the opportunity for the price appreciation of digital assets. Dorsey ruled that bankruptcy rules require the company's debts to be linked to the date it applied for court protection. Therefore, this is similar to the value of claims proposed by FTX in previous reports by Odaily, compensating based on the price of Bitcoin at around $16,000, which will undoubtedly cause significant losses to the creditors.

Looking at the bright side, if it weren't for this current bull market starting in 2023, the remaining cryptocurrency assets after FTX's bankruptcy might not have been enough to repay all investors. In other words, repaying based on recent prices is almost impossible, but this round of appreciation has made it possible for FTX to compensate based on the prices in November 2022.

"I hope the court and stakeholders understand that this is not a guarantee, but a goal," Dietderich said. "There is still a lot of work and risk between us and this outcome. But we believe this goal is achievable, and we have a strategy to achieve it."

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